Can Business Accelerators Level the Playing Field for Startups?

Abstract

The unequal access to venture financing and business expertise increases inequality and hinders innovation. With a focus on assistance and training for entrepreneurs, business accelerators have become an increasingly important part of entrepreneurial ecosystems. This paper examines whether and to what extent a business accelerator can level the playing field for first-time startup founders and female entrepreneurs, who face acute challenges in acquiring venture financing or inadequate human capital. With a novel dataset covering the universe of U.S. accelerators from 2008 to 2011, I estimate the value created by accelerators for different groups of entrepreneurs by exploiting preferences revealed during the admission process of for-profit accelerators. I develop a two-sided matching framework to control for sorting and selection. I find accelerators, to a certain extent, can close the gap due to founders’ prior experience, but not so much for the gender differences in general. Women tend to benefit more from top accelerators but are worse-off in large cohorts.